EEE means exempt-exempt-exempt and specifies three kinds of exemptions in taxes. “Exempt 1 means an investment qualifies for deduction and a part of the annual income, which is equal to the investment amount, is not taxable. Exempt 2 means the income on investments is exempted. Exempt 3 implies withdrawal of money from investment is tax neutral," said Rajat Mohan, founder, AMRG Associates. “Investment instruments falling under Exempt 2 are employee provident fund and public provident fund," said Ashok Shah, partner, NA Shah Associates.

EET stands for exempt-exempt-taxable where an investor can receive two exemptions on investments. “The first exempt implies that an investment qualifies for exemption. The second implies returns such as dividend and interest during holding period is also tax-free. But taxable implies that lump sum amount received at the time maturity or withdrawal is taxable," said Shah. Equity-linked savings scheme (ELSS) is an example of EET. “An ELSS comes with a statutory lock-in period of three years and qualifies for a tax exemption under I-T Act which allows an exemption till ?1.5 lakh," said Mohan.

“The first exempt implies investment qualifies for exemption. The term taxable implies return during holding period is taxable. The last exempt implies that lump sum amount received at the time maturity or withdrawal is tax-free. Normally, tax-saving five-year fixed deposit falls under this category, where an investment qualifies for exemption, interest income is taxable and maturity is exempt," said Shah. Another example in this category are the national saving schemes. These are eligible for tax deduction under section 80C of the Income-tax Act.